If you thought, the reopening of cinemas was the only hurdle multiplexes have to cross, you are wrong. One more very obvious tension that is giving exhibitors sleepless nights is whether the public will frequent multiplexes once they are permitted by the government, to reopen. But there are two more pressing problems that are staring them in the face.
The first major problem for the multiplex owners is that of the rentals. Since most of the multiplexes of many of the chains are built on leased properties, the question of rents to be paid for the lockdown months when they were shut has to be sorted out with each landlord. While multiplex owners are trying to invoke the force majeure clause in their lease agreements to avoid paying rent, many of the landlords are not in a mood to forgo the rentals for seven months (of the lockdown). There will be the additional tension of re-negotiating the rent for the few months when business is expected to be very slow once cinemas are allowed to reopen. Since social distancing will have to be maintained in the cinemas till the coronavirus scare reduces or dies down completely, multiplexes may end up doing lesser business for weeks or months together. The attempt will, therefore, be to have the rentals reduced. How many of the landlords oblige the multiplexes is to be seen.
Another very serious problem relates to the revenue-sharing ratio in the changed scenario. Of course, this topic is not being discussed openly but that in no way implies that it does not exist. Producers are already decided that they will ask the multiplexes to give them a much higher share of the box-office collections once business reopens. It can safely be expected that the producers of Sooryavanshi and 83 will demand a larger share of the pie for several reasons. For one, they stood in solidarity with the exhibitors and, unlike several of their ilk, did not premiere their films on an OTT platform. This has meant that they have taken a hit of several crores of rupees by way of interest on money. An option available to them would have been to liquidate their investment by bypassing theatrical release and premiering their films on one or the other OTT platform like Amazon, Netflix, Disney+ Hotstar, Zee5 etc. If they did not succumb to temptation, they would now definitely expect the multiplexes to compensate them for their gesture. There are no free lunches, goes the age-old saying. It may be recalled here that much before any OTT platform announced even a single film for premiere, the multiplexes had, under the aegis of the Multiplex Association of India, requested producers to refrain from choosing the OTT path. They had made a fervent appeal to producers to hold on to their films and stand by them (cinemas) in view of their long-standing relationship. Those producers who, in fact, heeded their advice will expect the multiplexes to now reciprocate by parting with a higher percentage of the box-office collections. At present, producers/distributors get 50% of the net collections in the first week, 45% in the second week, 35% in the third week, and 30% in the fourth and subsequent weeks. There is a bonus of 2% in the first three weeks for films which do exceptionally well. For far too long, producers have resented the fact that despite being the content creators, they get lesser and lesser shares as the weeks progress. This would be their golden chance to arm-twist (if one may use the term) the multiplexes and force them to give the content creators a greater share. At least the producers who waited for cinemas to reopen can demand, as a matter of right, a bigger share in the pie. Even otherwise, producers and distributors have not been happy with the sharing ratio which, according to them, is lopsided in favour of the multiplexes. Since exhibitors will be in a more vulnerable position after the lockdown is lifted, it may just be the right time to “bring them to their knees”, as a producer, wishing to remain anonymous, said.
The revenue-sharing ratio has been skewed in favour of the exhibitors because there is a shortage of cinemas in the country. But with at least 15-20 films opting for the OTT route during the lockdown, software will also be in short supply. Every star-cast film which has either already been premiered on an OTT platform or is committed for a premiere on the platform implies a loss of a week’s playing programme for the cinemas. If one were to assume that by the time cinemas are allowed to reopen, at least 15-20 films will have chosen the OTT path, it would mean a loss of around five months’ playing programmes for multiplexes and single-screen cinemas. Clearly, multiplexes (and single-screen cinemas) would never have felt so insecure! This situation is bound to be exploited by producers to force multiplexes to increase the producers’ share in the box-office revenue. One can almost hear Aditya Chopra, known to be very shrewd in his dealings, demanding 60% or even more of the box-office collections in the first week, and likewise, proportionately more in the subsequent weeks for films made under his Yash Raj Films banner. Multiplexes, desperate for software, may have no ground to refuse. Of course, it won’t be as simple as it reads here. But yes, a table for re-negotiations has probably already been ordered by the production sector.
On the other hand, multiplexes are confident that producers and distributors will not exploit the situation because they (producers and distributors) are aware of the losses which exhibitors have suffered during the pandemic. Said a top official of a leading multiplex chain, “Yes, producers have lost money in the lockdown period, mostly in terms of interest on their invested amounts, but that is nothing compared to the losses suffered by multiplexes and single-screen cinemas which have had to incur their huge fixed costs for the seven months of the lockdown. Even after the cinema reopening, we don’t know when people will return to the cinemas. Therefore, our tough times are far from over. In this scenario, we don’t expect producers or distributors to demand more from us.”